This invention relates generally to the field of computer-based systems regarding financing information, and more particularly, to a computer apparatus and method for exposing risk inherent in various financial plans using dynamic graphs and displays and for then permitting the user to re-balance that risk according to his/her risk tolerance.
The following United States Patents describe various types of computer based systems regarding insurance data:
U.S. Pat. No. 5,655,085 (Ryan et al.) discloses a computer system for preparing and processing multiple universal life insurance quotes and for preparing and processing universal life insurance applications based on these quotes (FIG. 1 of the ""085 patent). In particular, the computer system of the ""085 patent makes it possible for a single computer to efficiently provide multiple life insurance product illustrations for multiple life insurance carriers. The system of the ""085 patent steps a user through the application preparation process.
U.S. Pat. No. 5,479,344 (Keziah, Jr.) discloses an apparatus for receiving insurance data and for displaying life insurance needs in numerical format.
U.S. Pat. No. 5,523,942 (Tyler et al.) discloses a computer implemented graphical user interface for receiving instructions and information relating to insurance. The displays use conventional Window format for entering and displaying numerical data in tabular form.
U.S. Pat. No. 4,831,526 (Luchs et al.) discloses a computer system for processing and preparing applications for insurance and premium quotations and for preparing and writing insurance contracts. The displays utilize line displays.
U.S. Pat. No. 4,975,840 (DeTore et al.) discloses a method and apparatus for evaluating the insurability of a potentially insurable risk.
U.S. Pat. No. 5,504,674 (Chen et al.) discloses a communications network for processing insurance claims of objects.
U.S. Pat. No. 4,837,693 (Schotz) discloses a system including a group of computers for facilitating the implementation and administration of a desired group insurance plan.
U.S. Pat. No. 4,899,292 (Montagna et al.) discloses a system for storing and retrieving text and associate graphics for insurance estimation or service manuals.
U.S. Pat. No. 5,550,746 (Jacobs) discloses a method and apparatus for storing and selectively retrieving product data by correlating customer selection criteria with optimum product designs based on embedded expert judgments.
U.S. Pat. No. 5,537,315 (Mitcham) discloses a method and apparatus for permitting a patron to purchase an insurance policy and an insurance binder from a computerized kiosk.
It should be understood from the outset that the use of the term xe2x80x9cillustrationxe2x80x9d is a term of art describing any numeric, or graphic, interpretation and projection of assumptions of the future values of a life insurance policy.
Two types of illustration software exist on the marketplace: (1) product illustrations and 2) concept illustration software. Both are static, number, time and paper intensive systems.
Current product software calculates policy values and creates a ledger of numbers (generally from 6 to 20 pages in length) which illustrate what a specific insurance company""s policy values may look like in the future under a static set of economic assumptions (including Premiums paid in, Interest credited to the policy, Mortality charges, Selling expenses, General expenses, Lapse Rates). Although these illustrations contain footnotes which state that the policy has many xe2x80x9cnon-guaranteedxe2x80x9d assumptions most of the company""s specific assumptions are not disclosed to the reader. Thus, it is impossible for the policy buyer to fully understand what the term xe2x80x9cnon-guaranteedxe2x80x9d may mean as it might effect his future policy values.
Using an input screen on a PC or mainframe computer an agent or home office can enter policy input data to create one illustration at a time. The ledger and possibly a graph may be created illustrating this one set of assumptions. If a second set of assumptions is to be considered the input data must be changed or reentered and the ledger pages and graph reprinted. The output of dozens of pages of numbers and or a few graphs can be laid side by side to compare these two possible outcomes. In most cases agents will summarize this data and create a new summary of values to discuss with his client.
The problem with this approach is that it is labor, time and paper intensive and can only cover a very few alternatives. The result is a policy design and buying decision based on a limited number of alternatives considered.
The second type of illustration system in the market transfers the primary illustration data created above, inside the computer to a new platform to illustrate a sales concept rather than a policy per se. This generally requires some type of transfer of data from the main illustration system to a second system where it can be formatted into a variety of sales concepts. All these systems generate a single ledger and series of static graphs which can be used with a client. (Most of these systems also require the printing and delivery to client of all the pages from the basic illustration and footnotes mentioned above.)
The following companies sell software programs that fall in the above categories and which calculate life insurance policy data, print out numbered illustrations and/or present static graphic depictions: Fipsco of Des Plaines, Ill.; United Systems of Park City, Utah (INTEFLEX); FDP of Miami, Fla.; and Insmark of San Ramon, Calif.
The following United States Patents describe various types of computer based systems regarding financial data:
U.S. Pat. No. 4,839,804 (Roberts et al.) discloses a method and apparatus for insuring the funding of a future liability of uncertain cost.
U.S. Pat. No. 4,953,085 (Atkins) discloses a system for the operation of a financial account.
U.S. Pat. No. 5,083,270 (Gross et al.) discloses a method and apparatus for releasing value of an asset.
U.S. Pat. No. 5,237,500 (Perg et al.) discloses a system and process for converting constant dollar financial instruments.
U.S. Pat. No. 5,006,998 (Yasunobu et al.) discloses a computerized consultation system that permits the user to request advice and/or expert""s opinion regarding financial matters.
U.S. Pat. No. 5,095,429 (Harris et al.) discloses a method for modifying calculations on financial data in a financial information system whereby manually input data entered as a value can be prioritized above other values that are dependent on the first value by setting a lock flag to indicate that the data is to be secured against change by subsequent recalculation on the cell.
U.S. Pat. No. 5,495,412 (Thiessen) discloses a method and apparatus for supporting computerized interactive and assisted negotiations. This method and system computerize negotiation issues, preferences, and interested-stake holders and requires the parties to consider alternatives simultaneously, rather than separately.
U.S. Pat. No. 5,590,037 (Ryan et al.) discloses a method and system for computing a financial projection and an illustration of a prefunding program for an employee benefit.
U.S. Pat. No. 5,666,492 (Rhodes et al.) discloses a computer-based pharmaceutical care cognitive services management system and method that permits the transformation of pharmacist from vendor to a health care provider. The system utilizes a window display-format with multiple data fields for entering user-particular information.
U.S. Pat. No. 5,673,402 (Ryan et al.) discloses a computer system for producing an illustration of an investment repaying a mortgage. In particular, the ""402 patent discloses a computer system for preparing, processing and transmitting life insurance premium quotes as part of a mortgage calculation in support of a new financial product.
U.S. Pat. No. 5,636,117 (Rothstein) discloses a method and apparatus for monitoring the strength of a real estate market or commodity market and making lending and insurance decisions therefrom.
U.S. Pat. Nos. 5,185,696 and 5,222,019 (Yoshino et al., wherein the ""019 patent is a divisional application of the ""696 patent) disclose a financial calculator capable of displaying graphical representations of financial characteristics. However, among other things, the graphical representations are static and do not permit the user to vary any number of financial variables to xe2x80x9cseexe2x80x9d the effects in a dynamic illustration.
The following United States Patents describe various computer-based graphics systems:
U.S. Pat. No. 5,461,708 (Kahn) discloses a system and method for automated graphing of spreadsheet information based on the informational content and the layout of user-selected information. However, among other things, the graphical representations are static and do not permit the user to vary any number of variables to xe2x80x9cseexe2x80x9d the effects in a dynamic illustration; in addition, the system and method require the input of raw data in a spreadsheet cell-format (xe2x80x9cnotebook interfacexe2x80x9d 200-FIG. 2A) by the user.
U.S. Pat. No. 5,649,085 (Lehr) discloses a method and system for graphically displaying system operation trace information so that graphical objects representing event-pairs within the system operation are not visually obscured.
U.S. Pat. No. 4,800,510 (Vinberg et al.) discloses a method and system for permits high level control of computer-generated graphs, such as bar graphs, pie-charts and conventional X-Y plots.
Thus, there remains a need for an apparatus/method that allows the user to rapidly vary assumptions and view a dynamic illustration of future values of all types of financial planning, e.g., life insurance planning, estate planning, retirement planning and investment planning in order to reveal the risk inherent in such planning and to thereby give the user the ability to evaluate and re-balance the risk in accordance with his/her risk tolerance.
Accordingly, it is the general object of this invention to provide an apparatus which addresses the aforementioned needs.
It is a further object of this invention to provide an apparatus and method of exposing risk inherent in financial planning areas such as retirement, insurance, estate decision-making and targeted financial goal funding.
It is another object of this invention to provide an apparatus and method of evaluating risk inherent in financial planning areas such as retirement, insurance, estate decision-making and targeted financial goal funding.
It is a further object of this invention to provide an apparatus and method of re-balancing, according the user""s appropriate risk tolerance, the inherent risk in financial planning areas such as retirement, insurance, estate decision-making and targeted financial goal funding.
It is yet another object of this invention to provide an apparatus and method of visualizing the elements of risk in any financial decision when the underlying elements of risk are known and can be inputted or computed.
It is still yet a further object of this invention to provide an apparatus and method of both visualizing the elements of risk and the re-balancing of that risk in accordance with the user""s risk tolerance in any financial decision when the underlying elements of risk are known and can be inputted or computed.
It is yet another object of this invention to provide an apparatus and method for demonstrating the actual tradeoffs between premiums and values.
It is still yet another object of the present invention to provide and apparatus and method that provides the user with the ability to inquire about the specifics of the financial plan and then to modify at least one variable to the see the effects of such modification on the financial plan.
It is yet another object of this invention to provide an apparatus and method, concerning a life insurance plan, that provides a graphic depiction of the generic guaranteed values, generic assumed values, possible premiums and life expectancy, in respective graphs at the same time in the same display screen.
It is still yet a further object of this invention to provide an apparatus and method, concerning an estate plan, that provides a display of estate assets in the order of their liquidity and which can show their consumption upon death of the estate owner in accordance with estate taxes.
It is even yet a further object of this invention to provide an apparatus and method that provides an illustration system, for a plurality of financial plans, having an illustration screen that changes so that a motion picture effect occurs, thereby allowing the user to see many alternatives quickly.
It is still yet even a further object of this invention to provide an apparatus and method for a financial plan illustration system through which the user can reset any single assumption, view the outcome, or set a range of changing assumptions and view the progression of the policy from one point to another point.
It is yet even another object of this invention to provide an apparatus and method for a life insurance illustration system that permits the user to have a computer correct any of a number of variables to create an illustration which stays in force for life.
It is still yet another object of this invention to provide an apparatus and method that utilizes an alternative investment appreciation method, namely the SandP500(copyright) Index, for calculating future values of the financial plan.
It is even yet another object of this invention to provide an apparatus and method for a life insurance illustration system that permits the user to visualize the risk with electing an increasing death benefit and to then re-balance the risk to meet user objectives.
It is still yet a further object of this invention to provide an apparatus and method for a life insurance illustration system that permits the user enter an extra premium to be paid during the 1st year, in addition to the regular, annular premium, to see the effects of the extra premium on the death benefit and the cash value.
It is still another object of this invention to provide an apparatus and method for a life insurance illustration system that permits the user to enter various premiums in order to explore the risk associated with paying these different premiums and then permitting the user to re-balance the risk to meet user objectives.
It is even yet a further object of this invention to provide an apparatus and method for a life insurance illustration system that permits the user to determine the amount of premiums necessary to keep a policy in-force when certain withdrawals of cash value are made from the life insurance plan at predetermined intervals.
It is still yet a further object of this invention to provide an apparatus and method for a life insurance illustration system that permits the user to test a current life insurance plan against original assumptions made on the life insurance plan.
These and other objects of the instant invention are achieved by providing an apparatus for revealing to a user the risk inherent in financial planning. The apparatus comprises: (a) a computer including a memory, a processor and a graphical user interface; (b) input means coupled to the computer for inputting variables related to a financial plan (e.g., a retirement plan, an estate plan, an investment plan, a life insurance plan, etc.) into the computer by the user; (c) a monitor display coupled to the computer for displaying the variables and future values of the financial plan; (d) where the memory includes: (1) calculation means, operable by the processor, for calculating the future values of the financial plan; (2) at least one financial planning module, operable by the processor and coupled to the calculation means, for controlling the graphical user interface to generate the future values in graphical format; and (e) means for modifying, coupled to the at least one financial planning module, the at least one variable of the financial plan by the user from a first value to a second value, and whereby the at least one financial planning module controls the graphical user interface in accordance with the modification of the at least one variable from the first value to the second value to provide a graphical representation of the risk inherent in the financial plan.
These and other objects of the instant invention are also achieved by providing a method for revealing the risk inherent in a financial plan (e.g., a retirement plan, an estate plan, an investment plan, a life insurance plan, etc.). The method comprises the steps of:(a) providing a computer including a memory, a processor, input means, and a monitor; (b) supplying the computer with user-particular data and financial plan data through the input means; (c) supplying the memory with finance algorithms; (d) calculating future values of the financial plan using the user-particular data, financial plan data and the finance algorithms using the processor; (e) modifying at least one variable of the financial plan by the user from a first value to a second value; (f) presenting a continuously changing graphical display on the monitor in accordance with the modification of the at least one variable, and whereby the changing graphical display reveals the risk inherent in the financial plan.